Working in the insurance business for 12 years made Charles Mazzini curious about something: If people get health insurance for their spouses and children, why don't they get coverage for their pets? Discussing his idea with veterinarians showed Mazzini how big the market for this service could be. "There was a statistic [that] over 80 percent of people do not do yearly vaccinations [for their pets]," says Mazzini, 37.

Cost is usually a factor keeping families from getting their pets vaccinated or even having surgery. To help pet owners, Mazzini founded American Pet Plan Inc. in 1995. The Houston-based insurance company offers coverage for everything from hamsters to horses, at minimal cost: $50 a year for the first pet, $25 for each additional pet, and doctor visits are $5 ($10 for exams). Twenty percent is taken off the bill for X-rays, lab work and surgery.

Veterinarians recommend the plan to their patients, earning a commission for patients who sign up. Insurance agents also sell American Pet Plan, but many members come to the company through referrals. "It's a plan that is referred to family and friends," says Mazzini, adding that members earn one free month of coverage for every referral who joins. "Probably about 80 percent of our members refer the plan to someone."

American Pet Plan is currently available in Arizona, California, Florida, Ohio, Oklahoma, Tennessee and Texas. While the company is looking to expand into other states, Mazzini also wants to grow his venture through partnerships with companies like Petco. Confident there's a need for this type of service, Mazzini has no doubts about his company's growth potential: "Veterinary costs have just gotten out of hand. The cost has escalated to the point where people are not taking their pets to the veterinarian."

Mazzini is so confident, in fact, he doesn't even fret about future competition. "I think it's going to be the business of the future," he says. "I'm sure there [will be] some copycats out there, [but] that's fine-that would actually make me feel good."